Week 6 of our 7 week series on how to build your crowdfunding project, and we’re almost ready to launch your project! Your team is still active in the background, you have honed your story so it sounds great, you’ve indentified your crowd and know where to hit, and you have created some great rewards for those that pledge. So this week is an important part, we are going to talk about Step 5 – Getting Funded.
So to recap on How it Works:
- Create your project on Crowdfunder
- Share your idea with the crowd, they pledge cash for rewards
- Your idea gets funded!
In our previous blogs we discussed:
- How Crowdfunding Works – 6 Steps to Success
- Step 1 – Building your Team
- Step 2 – Your Story
- Step 3 – Identify Your Crowd
- Step 4 – Creating Great Rewards
Getting your Crowdfunding Project Funded
Communicating your project idea with your community is key to getting successfully funded. Sharing your project with your network, and asking them to share it with their network, is essential.
When deciding on your target find a happy balance between the amount you need to raise and what is realistic from your audience. Your Target will be determined by how much your budget dictates you need, but be realistic and reasonable when considering how much you really need.
Refer back to your spreadsheet of similar projects from earlier (in your planning & research stage). What was the average donation amount?
Your project costs
It’s critical you understand how much things cost before you take anyone’s money, and then set a realistic funding goal. Account for not only how much it will cost to build, make, produce or action your project, but also how much your rewards and incentives will cost you. Projects need to take into account the total costs associated with a crowdfunding project such as crowdfunding platform fees, rewards shipping/postage costs, taxes and the cost of making a pitch video.
Consider these three things when setting your funding goal:
- Production Costs – Connect with people who have built projects similar to yours to get an idea of how much it actually costs to produce
- Marketing Expenses — Word of mouth will play an important role in your campaign, you can have marketing expenses, so compare costs for advertising on social media and search channels
- Rewards — If you’re giving away tangible rewards like t-shirts and other premium items, how much will they cost to make? If you’re giving away beta release products, how much they will cost to manufacture?
Most of this you should have taken into account on your spreadsheet in the planning & research period at the beginning of your project. So dig out your spreadsheet & start using these figures to calculate your project costs, so you know how much you have to shoot for to cover those costs & make the required Target.
Set funding goals
Know your goal. Set benchmarks along the timeline of your project, and aim to meet those goals. Divide your Target by the number of weeks your project will run.
- If it’s a commercial venture, you should aim to raise 25% of your funding within 24 hours
- If it’s a private or community venture, you should aim to raise 50% of your funding within the first week
It seems a lot in the early stages of the project, but the best time for optimum momentum in a projects lifetime is at the beginning. It’s when you are pumped. You are ready to pump your crowd. After all of your planning and teamwork, there should be an excitement about the project. So just go for it!
How long should the Project run for?
Crowdfunding projects that last 28 days have a greater chance of getting fully funded, than those that last 60 days. Urgency is a powerful motivator in crowdfunding, it encourages people to pledge funds and prompts them to spread the word. Give people too much time and they get the impression that they can pledge any time, often when it’s too late.
On the other hand, too little time can make your goal unreachable.
Also, if you run the project too long, your backers may forget to have the funds in their bank accounts when it comes to collection. So you may think you have raised £3000, but in reality you will probably only get £2500. For those with limited funds, 8 weeks is a long time to keep money in the bank. So shorter project durations in this regards, is definitely better.
NEXT WEEK … Step 6 – Shout About It!